October 08, 2019 | SOS Inventory

5 Biggest Digital Transformation Risks Small Businesses Should Be Aware Of

digital transformation

Digital transformation is becoming a necessity for businesses to remain competitive and while it brings a host of risks, it’s important to have the courage to make decisions that push the limits of the organization. Migrating to the cloud, for example, made many businesses uneasy as they felt they no longer had full control. But in ‘9 Reasons Moving Your Business to the Cloud Should Be on Your Radar for 2019’ we discussed how it provides freedom in terms of accessibility, flexibility, and independence. Having said that, let’s consider some of the risks of digital transformation.

Employee and User Acceptance

The digital transformation of your business can be challenging for both your employees and your clients. While employee accept new changes, having to adapt to new practices may present a challenge, but in the long run they will have no choice but to accept the change. There will be resistance at first, but the company must make the process as transparent as possible and address any employee concerns that may arise.

When it comes to your customers, if they are inconvenienced and find that your new practices are too much for them to adapt to, they will simply leave and seek a business that meets their demands. Tech expert Melissa Burns writes that the user experience needs to be as frictionless and pleasant as possible, to have them ease into the new systems and the benefits will need to be clearly communicated.

Employee Skill Gaps

Naturally, digital transformation often requires a complete change of business operations, change in core processes, and the introduction of new technology to facilitate it all. The entire process will most probably require skillsets that your current workforce might not possess.

Many businesses that have been around for a long time and traditionally have been more conservative, will unsurprisingly be more resistant to change and have a harder time transitioning to the digital economy. This goes back to employee acceptance, as a result, any digital transformation processes need to be done vis-à-vis proper workforce retraining and skills program. This includes training on the use of digital technology, new processes as well as cybersecurity.


Although cloud technology, IoT and mobile technology are helping businesses automate many of their processes, and gather helpful data, the increased use of this technology also widens the cyber attack surface considerably. Information Age explains how many IoT devices are always on, and when connected to a corporate network can become an open door for hackers. Therefore, it’s imperative that businesses inspect their IoT and mobile devices thoroughly for vulnerabilities and whether the manufacturer provides software patching and vulnerability management.

This is why Marcus’ guide to cybersecurity basics emphasizes the importance of taking vigilant steps like always keeping technology up to date for the latest vulnerability patches. With digital transformation bringing a larger attack vector, organizations need to take a long, hard look at their cybersecurity practices by properly training their employees in cyber hygiene, and employ disaster management and recovery procedures to mitigate the risks and prevent data loss.

Privacy Concerns

In an age where consumers want personalized experiences at the tip of their fingers, the collection of large amounts of private data is a necessity with digital transformation. But the paradox is that over 54% of Americans don’t believe companies have their best interest at heart. People are giving up their privacy and becoming loyal customers and want to be assured that their data is secure.

As a result, companies that incorporate transparent privacy policies into the core of their business operations are the ones who will see an increase in customer loyalty. Privacy is going to become a game-changer, as those organizations that can guarantee their customers their data will only be used to enhance the user experience, no more and no less, will reap the most rewards from digital transformation.

Being Too Cautious

We mentioned at the beginning how the process of digital transformation requires courage to make risky decisions. This is why companies need to take bolder calculated risks. Many C suite leaders look back at their initial transformation changes and wish they’d been bolder with some of their decisions. The best analogy for being too cautious and making small changes is like rearranging deck chairs on the Titanic as it’s sinking. Today’s business environment moves fast and leaders need to be able to keep abreast of the rapid changes. This, however, doesn’t mean being reckless, ignoring common sense and making rash decisions. Companies that perform the best are those that hedge new technologies and business models, foster a learning culture where failure is an opportunity to improve and launch change programs that transform their whole business.

Written exclusively for Sosinventory.com

by Leslie Johnson

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